Page 18 - Research on Financial Development Mechanism and Path of Forestry Carbon Sequestration in Developing Countries under Double Carbon Targets

Research on Financial Development Mechanism and Path of Forestry Carbon
Sequestration in Developing Countries under Double Carbon Targets

1.2 Three Functions of Green Finance in Support of the
“Double Carbon” Target

In March 2021, after a long period of research, the central bank established the
thinking of green finance development policy, pointing out that green finance has “three
major functions”, namely, resource allocation, risk management and market pricing
functions, to protect China’s smooth realization of the “double carbon” target.

1.2.1 The development of green finance will effectively provide financial sup-
port for the realization of the “double carbon” target

In 2021, the CPC Central Committee and the State Council, the National Devel-
opment and Reform Commission and other relevant departments issued a number of
documents, including the “Notice on Issuing Benchmark Levels and Benchmark Lev-
els of Energy Efficiency in Key Fields of Energy-intensive Industries (Edition 2021)”,
which specified the phased targets of energy consumption and carbon dioxide emission
intensity per unit of GDP, decomposed the “double carbon” target, and was more con-
ducive to the realization of the “double carbon” target. When all walks of life and all
fields implement all-round green development, this also means that there is a demand
for green investment and financing. However, if only relying on government strength is
not enough to fill the huge funding gap of the “double carbon” target, it is necessary to
actively guide private and social funds to invest in the green and low-carbon fields. By
introducing financial resources, it provides signals and directions for human resources,
science and technology, data and other elements. As the dividends of green develop-
ment continue to show, finance will further tilt to the green field in the future; The de-
velopment of green finance can restrict capital from entering polluting enterprises such
as high carbon and high energy consumption, and the advantages of green development
will be further highlighted.

1.2.2 Green finance can reduce the adverse effects of climate and environmen-
tal risks

In recent years, natural disasters have occurred frequently, causing adverse effects
on the economy. Climate risks can be further classified as physical risks and transi-
tion risks. For example, extreme disasters such as the Australia Mountain Fire and the
Zhengzhou Flood are physical risks. Physical risks will lead to financial losses, infla-
tion and other issues, affecting economic stability. After the “double carbon” target

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